Most investors think the worst 25-year stretch in stock market history must have been a financial graveyard. The numbers say otherwise, and they reveal one of the most counterintuitive truths in investing.
On the Money Guy Show podcast Everyday Investors Are Beating Fund Managers (Copy Their Strategy), hosts Brian Preston and Bo Hanson walked through a piece of history that should be required reading for anyone afraid of today’s market. The Dow Jones closed at 381 on September 3, 1929. It closed at 383 on November 23, 1954. A $2 gain over 25 years.
As Hanson framed it, “That’s not even a lost decade. That’s like a lost working career.”
The 11.7% Surprise
An investor who dollar-cost averaged through that same window, systematically buying every month and reinvesting dividends, earned an average annualized rate of return of 11.7%. The index went nowhere. The disciplined buyer compounded wealth anyway.
Preston explained the mechanism this way: “Your behavior was the all-terrain vehicle. It was buying while things were going down. You were still buying while things started to recover and had a sputter start, but then went back down. You were still buying.”
The math works because dividends reinvested at depressed prices buy more shares, and those shares then produce more dividends. A flat index masks the engine running underneath. By 1954, the dollar-cost averager owned a much larger share count than the price chart would suggest, all accumulated at average prices well below the 1929 peak.
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Quick Read
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An investor who dollar-cost averaged systematically from 1929 to 1954, when the Dow Jones gained only $2 over 25 years, achieved an 11.7% average annualized rate of return by reinvesting dividends at depressed prices and accumulating a larger share count.
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Today’s investors facing market volatility and consumer sentiment at 53.3 (below the 60 recessionary fear threshold) can apply the same discipline through automated 401(k) and IRA contributions with dividend reinvestment enabled, since cash is losing purchasing power with CPI at the 90.9 percentile while Treasury yields sit at 4.61%.
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Why This Matters In May 2026
Today’s investor faces a familiar cocktail of anxieties. The VIX sits at 17.82 as of May 18, 2026, off from a peak of 31.05 reached on March 27, 2026. Investors who panic-sold into that spring spike missed the recovery that followed automatically for anyone still making scheduled contributions.
